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Navigating the Markets: A year in review

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Charting the Course: A Reflective Look at 2023 Performance

Sean Gilbert

Chartered Financial Planner

19th January 2024

As we navigate through the ups and downs of the financial world, it’s always a good idea to check in on how our investments are doing. About a year ago, we shared some thoughts on spreading the risk and potential for growth by diversifying an investment portfolio, with a mix of funds.

Now, let’s take a look back at how our collection of investment funds have performed over the past year.

Financial Market Background

In the final quarter of 2023, all the major equity regions experienced robust returns, with the bulk of these gains occurring in November and December. The driving force behind this surge was the growing anticipation that central banks would expedite interest rate cuts in 2024, defying earlier predictions. The waning concern about enduring high-interest rates particularly fueled the rise of growth stocks.

North American equities, renowned for their growth orientation, emerged as the top performers among the primary equity regions in terms of local currency. While the market rally, dominated by the ‘magnificent seven’ tech and AI stocks throughout the year, widened its scope in the last quarter.

Europe ex-UK equities also displayed impressive returns and stood out as the leading equity region when assessed in sterling terms.

On the flip side, Asia Pacific ex-Japan and Emerging Markets reported the lowest sterling returns in Q4, although still in positive territory, primarily influenced by a dip in Chinese equities.

Investment Funds Recap

In our previous article, we carefully highlighted 19 funds that catered to specific investment objectives. To fully comprehend the rationale behind each selection and the unique purposes they served, we encourage you to revisit the earlier piece.

Now, as we provide a performance update on our investment fund portfolio, the following list encompasses the funds we identified last year.

2023 Performance

Despite market fluctuations, 2023 proved to be generally favourable for investments, with 18 out of the 19 funds we identified demonstrating positive returns.

It’s crucial to note that even in the face of a potentially negative market scenario, our investment approach remains steadfastly focused on the medium to longer term.

The table below shows how each fund fared:

Source: Defaqto. The table shows an investment’s performance, calculated as NAV to NAV/Bid to Bid/Closing Price to Closing Price, with dividends/distributions reinvested, including the effect of ongoing costs and charges. 

Please remember past performance is not a guide to future returns.

Summary

In summary, the review of this portfolio of funds indicates solid performance in 2023, with 18 out of the 19 identified funds showing positive results.

Regardless of potential market fluctuations, a good investment strategy should remain focused on the medium to longer term.

Notably, investments in line with this diversified portfolio would have experienced an increase of 9.56% throughout the year, however during 2022 would have experienced a drop of a similar amount – 9.34%.

It is important to note that diversification does not guarantee a profit or protect against loss. It is also important to understand that diversification alone may not be enough to meet your investment goals, it is only one component of an overall risk management strategy.

A financial adviser can help you to create a diversified portfolio that aligns with your investment goals and risk tolerance. They can also monitor and rebalance it over time to ensure it remains suitable. We would always recommend that you seek professional advice before making any investment decisions.

This information is based on our current understanding and is subject to change without notice. This article is for general information only and does not constitute advice.  Whilst information is considered to be true and correct at the date of publication, changes in circumstances, regulation and legislation after the time of publication may impact on the accuracy of the article.

The value of investments and the income from them can go down as well as up and you may not get back the amount originally invested.

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

We have local offices in Edinburgh, Falkirk, Glasgow, Livingston and Stirling and provide Financial Advice throughout Scotland. If you would like to speak to an Independent Financial Adviser (IFA) then book your free initial consultation.

Sean Gilbert

Chartered Financial Planner

Chartered Financial Planner at Select Wealth Managers with 14 years of Financial Services experience. Before working in Financial Services, Sean…

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